TORONTO — Canada’s main stock index dropped more than 1,000 points on Friday, while U.S. markets also finished lower.

The mining-heavy TSX fell along with gold and silver in reaction to U.S. President Donald Trump announcing he’d chosen Kevin Warsh to replace Jerome Powell as U.S. Federal Reserve chair.

Whoever leads the Fed has a big influence on the global economy and stock markets by helping to dictate where the U.S. central bank moves interest rates. Such decisions lift or weigh on prices for all kinds of investments.

“Kevin Warsh, who is more hawkish perhaps than maybe some of the other candidates seem to be, that gave a bit of a boost to the U.S. dollar and a bit of a selloff for gold and some of the metals that … act as a hedge against the U.S. dollar,” said Allan Small, senior investment adviser at iA Private Wealth.

The S&P/TSX composite index was down 1,092.61 points at 31,923.52. The April gold contract was down US$609.70 at US$4,745.10 an ounce. The loonie also lost more than half a cent; it traded for 73.74 cents US compared with 73.99 cents US on Thursday.

Small said Friday’s declines on the Canadian stock market mainly came from the basic materials sector, which includes mining companies. He said a pullback in the price of precious metals was “overdue” and the further prices rose, “the bigger the pullback was going to be.”

“I just figured that something like this would happen. What we’ve been witnessing over the last couple of months and even all last year, in my opinion, is a bit of an anomaly,” Small said.

“Gold has been going up and that’s fine, but at the pace that it’s been doing it recently, in my opinion, it’s just crazy.”

Small said the sell-off in precious metals may continue after Friday’s trading session, but it is difficult to assess where prices will move in the future.

“I don’t know if today’s a one-day wonder with respect to materials. In my opinion, this could be a start of a downward spiral for the prices of gold and silver. I think they’re way too high,” he said.

In New York, the Dow Jones industrial average was down 179.09 points at 48,892.47. The S&P 500 index dropped 29.98 points at 6,939.03, while the Nasdaq composite fell 223.30 points at 23,461.82.

One fear in financial markets, which has pushed up gold’s price and weakened the U.S. dollar’s value, is that the Fed will lose some of its independence because of Trump’s interference.

“Kevin Warsh is a good choice in that if they were to choose some of the other candidates, it might be conceived that the president is trying to control the Federal Reserve, that the Federal Reserve would not be considered independent,” Small said.

The longtime assumption has been that the Fed can operate separately from the rest of Washington so it can make decisions that are painful in the short term, such as keeping interest rates high and grinding down on the economy, to fix a long-term problem, such as getting inflation back down to its goal of two per cent.

The March crude oil contract was down 21 cents US at US$65.21 per barrel.

This report by The Canadian Press was first published Jan. 30, 2026.

— With files from The Associated Press.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Daniel Johnson, The Canadian Press